What are some neighborhoods in Indianapolis that are appreciating but have favorable price/rent ratios?

Question

Hi All,

I'm looking for neighborhoods in Indianapolis that is changing or moving up but that still has great cash flow.

Any thoughts?

Thanks,

Ron

Mike D'Arrigo · Answer

You can get good cash flow nearly anywhere in Indy because of it's affordable home prices.Most areas of  Indianapolis are seeing good appreciation--up 7% YOY, however, a lot of it is investor driven right now. The areas that will have the best appreciation are the outlying suburbs outside of the 465 loop. Areas like Perry and Franklin townships on the south and the Cumberland area on the east will do best. Indianapolis is primarily a cash flow market however. You shouldn't count on big equity gains from appreciation.

Ross Denman · Answer

@Hana Bae currently we have a strong selling season in Indy and it's keeping the MLS properties at a pretty competitive range. I am expecting a pretty soft market by late Fall this year and probably for the next year with the election circus that's about to happen.

As @Bobby Sharma said, if you are looking at wholesale properties, you will have to ensure that you do your due diligence and verify every number. Most of these deals are motivated because there is some kind of problem and they may not be obvious from the listing descriptions. Also, most wholesale deals use somewhat unreasonable numbers to dress up deals. ARV's for homes that aren't really comparable. Bare bones rehab budget. Higher than market rental assessments. By the time you reduce the ARV by $20k, double the rehab budget and reduce the projected rent rate, you will find that most wholesale deals aren't really deals. The wholesaler tends to walk away with more net profit than the investors have in equity.

Because of that, I'm a big fan of team building and we've found that working with property managers and investor oriented Realtors tend to be the most important part of your team. I good realtor will help evaluate and close a wholesale deal, but they may charge a fee on top of the wholesale price since they don't usually get much of a bird dog fee from the wholesalers. You realtors/PM's should be able to assist you in getting a rehab budget built and the framework for a scope of work.

To answer the questions about locations... it depends on the amount of risk you're looking to take on right now. I'm watching Twin Aire very closely as the city has some developmental plans going on.

http://liscindianapolis.org/media/Twin-Aire-Abridged-Plan-ilovepdf-compressed-1.pdf

There are also several westside projects scheduled over the next 5 years or so that will be changing the near West side and the Riverside/United Northwest Areas.

Personally, I'm a bigger fan of already established areas on the outskirts of town where we can get good tenants now. Areas with a poorer tenant pool tend to not cash flow or at least not cash flow well. If you're looking for something to hold now that will be changing over the next couple of years, you can check East of Rural, South of Brookside Park, but north of the 1300 block. The closer to Rural the better as violent crime around Sherman has gotten pretty bad.

Kerry Edwards · Answer

There are area's that I would totally stay away from. As @Mike D'Arrigo  stated Indy is cash flow market on the investor side. So while formulating your model/plan you should be sure of the viability of your exit strategy.

The neighborhoods that cash flow well typically are over 60 % investor owned. That can be good and bad, on the buy side you can skew the comps down due to cash, HUD, Tax, non MLS and private deals. But then on the sell side you'll struggle to show retail value and will usually have to owner finance or find another investor. One of the great things about being an out of market investor is if the numbers work they work.

That being said, if you have an attractive package of doubles in Broadripple, Butler/Tarkington, Irvington, or Meridian Kessler it should move fairly quick.

Outside of the 465 loop you'll find many of the newer "vinyl villages" that still have lots of HUD,REO, Foreclosure and prices are still unstable. IMO unless you are in for the very long term you might wait to get in there. Very long term they should be good even at current price point.

Taylor Jennings · Answer

@Ron Steckly This is an investor map I put together.

All properties are owned by investors with 10+ houses in Indianapolis.

http://bit.ly/1brQhqx

It should prove useful =)

Bobby Sharma · Answer

@Hana Bae yes we invested a while back and we continue to invest. You have to watch out for certain wholesalers there, some are very crooked.

Hana Bae · Answer

@Bobby Sharma

Hi Bobby,

I know this is an old thread but I would love to hear your insight if you invested in Indianapolis 3 years ago! I’m looking into investing in Indianapolis — how is the rental market currently? What neighborhoods did you invest in?

Thank you!

Derrek D. · Answer

I am also looking into this market for smaller multi-family.  It seems the outside investors have been scooping up the larger apartment properties.  Info on small multi-family is needed.  Here's one article from the Indy Star (newspaper).

http://www.indystar.com/story/money/2016/01/22/indianapolis-apartment-sales-top-500m-out--town-buyers-flock-market/78373550/

Bobby Sharma · Answer

Folks, seeking some advice. I was recently referred by a BP presenter to the Indianapolis real estate market. I realize that this thread is old but was trying to get more current updates on what is happening with the Indy real estate market as far as investors are concerned. I am looking for a market that has decent cash flow and decent upside. Looks like Indy has been a favorite for cash flow investors for quite some time.

Would like to get some insights from the local investors, rehabbers.

Thank you in advance.

Regards,

Bobby

Ron Steckly · Answer

Thanks Mike and Kerry!

I found this:

https://wholesale-houses.com/investment-news/entry/2013/01/29/a-few-neighborhoods-in-indianapolis-that-we-like

Would you say this is accurate?

Ron

What are some neighborhoods in Indianapolis that are appreciating but have favorable price/rent ratios?

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